Regulating marijuana could mean millions for Michigan

Dozens of medical marijuana dispensaries are sprinkled in cities across the state, and Detroit has 61 pot shops open for business. But come this time next year, the landscape for weed around the state could be completely different.

That’s when the state will begin officially handing out licenses to growers, testing facilities, transporters and dispensaries.

The state Department of Licensing and Regulatory Affairs (LARA) is beginning to gear up for the task of regulating a new, and potentially very lucrative, business in the state. The medical marijuana business is projected to generate revenues of more than $700 million, and if a ballot proposal goes to voters in 2018 and the market is opened for recreational use, too, those revenues will easily surpass $1 billion.

“Most states have had two years to get this going,” said Shelly Edgerton, director of LARA. “For us, this is a huge endeavor.”

Andrew Brisbo, who has served as LARA’s licensing division director, has been named as the director of the newly created Bureau of Medical Marijuana Regulation. He will be in charge of the department that could grow to nearly 100 employees who investigate all license applicants and ultimately regulate the medical marijuana business and administer the system that tracks medical marijuana from seed to sale.

LARA approved a $447,625 contract with Franwell to provide the monitoring system. The Lakeland, Fla.-based company also provides a similar service to Colorado, which was the first state to legalize marijuana for recreational use.

Right now, there are 240,000 people who have gotten medical marijuana cards that allow them to use weed legally to treat a variety of ailments. They are served by 40,000 state-approved caregivers, who can grow up to 12 plants for each patient and who are allowed up to five patients each.

The new law keeps that system in place but also creates five categories of medical marijuana licenses for growers of up to 1,500 plants, testing facilities, transporters, dispensaries and the seed-to-sale tracking. The dispensaries will be taxed 3% on their gross receipts, and that money will go back to the state and local communities. The state is still coming up with an application and licensing fee schedule, which will cover the cost of regulating the industry — an estimated $18.6 million, according to Gov. Rick Snyder’s budget proposal for the department.

The applications for licenses will become available on LARA’s website Dec. 15.

While most states with legalized medical or recreational marijuana have a government department approve licenses, Michigan will have a five-member board make those decisions, based on recommendations from Brisbo’s department. Snyder has three appointments; the other two come from the Senate Majority Leader and the Speaker of the House. Snyder is expected to make the appointments soon.

“The placement of the program in LARA makes sense,” Brisbo said. “Because we’re the experts in licensing processes and how to have a fair, efficient operation.”

Edgerton said the department licenses more than 1 million people but the medical marijuana licenses will present challenges with background and financial-disclosure investigations that could spread across the nation.

“This is a new, fast-paced industry. It’s a constant evolvement of operations and quirks and new dimensions to this industry,” she said. “It is hard to keep up.”

And contrary to the rumor mill in Lansing, which is abuzz with stories of licenses already being awarded and people being able to pay to ensure license, Edgerton said, “Listen, there is no pipeline. There are no guaranteed licenses.”

The process will begin in communities that will decide whether they want the business in their cities and towns. Some have wholeheartedly welcomed the industry, such as Detroit, which passed an ordinance in 2015 and now has 61 dispensaries operating.

Others are more reluctant. Monroe and Plymouth have said they’d prefer the businesses operate elsewhere.

Current businesses, however, operate at their own risk. While communities must make the initial decision on whether and who to allow in, it will be up to the state to grant the license.

“Communities have to authorize all the businesses — the growers, the safety facilities, the transporters, the dispensaries,” Edgerton said. “They may authorize, but the business may not be eligible based on our background check.”